IMF Has Clear Role in Interconnected World

Rise of emerging economies, globalization seen as key trends

Structural economic reforms will be vital over long run

IMF needs to continue adapting to changing global circumstances

At “Long-Term Global Trends and Their Implications for the IMF,” a group of eminent thinkers examined "big picture" global trends, such as the rise of emerging market economies, the aging of populations, the rapid development of technology, and climate change.

These long-term trends are shaping the future global economic landscape. To be able to predict and avert crises, the IMF and others will have to pay greater attention to these developments, suggested Namrata Brar of New Delhi Television, who moderated the session.

“At the macro level, the world is becoming ever more interdependent,” said IMF Deputy Managing Director Min Zhu. “We need to truly become the institution to safeguard macroeconomic stability in a super-interconnected world.”

Joining Zhu on the panel were economist Nouriel Roubini, journalist Thomas Friedman, and Singaporean Finance Minister Tharman Shanmugaratnam.

From connected to hyperconnected

Brar began by asking the panelists to name the one long-term global trend that will be predominant over the next decade and that the IMF cannot afford to ignore.

Globalization is the leading trend, said New York University’s Roubini. In addition to greater international trade in goods and services, there will be more international movement of capital and labor, more global supply chains, and more foreign direct investment. Within this trend is the integration of emerging markets in the global economy. Over two billion Chinese and Indians are now joining the global labor supply, he noted, with workers from the rest of the world’s emerging economies close at their heels.

Partly as a consequence of this trend, the world is undergoing a major structural shift, he observed. Advanced economies are now increasingly the debtors and the borrowers and emerging economies are becoming the creditors, in a reversal of their traditional roles. “85 percent of the IMF’s loans now go to countries like Greece, Ireland, and Portugal,” Roubini said, “and it used to be the opposite.”

Thomas Friedman of the New York Times agreed, saying that globalization has been taken to a new level. Globalization was the subject of his 2004 book, The World Is Flat, which asserted that the world’s historic and geographical divisions were becoming increasingly irrelevant and the world is a...